Will Aphria Be the Most Profitable Canadian Cannabis Company in 2020?

The issue of a lack of profitability for cannabis companies came into the spotlight in 2019.  Yet, one company that has bucked this trend is Aphria (APHA)…

APHA has consistently been able to generate profits in the past year and in its quarterly earnings report released yesterday, they once again accomplished this.  The company reported a surprise fiscal third-quarter profit and revenue that nearly doubled and beat expectations.

As a result, their stock traded up 3%, as the stock market declined.

APHA reported net cannabis revenues that increased 65% from the prior quarter. This was also the company’s fourth consecutive quarter of positive Adjusted EBITDA, which makes APHA the only large-cap Canadian LP to do so.

They reported an operating income of $8.7 million along with adjusted EBITDA from cannabis operations of $6 Million. This figure increased 78% from the prior quarter and that means a lot to us especially during these tough times. APHA can now produce cannabis for less than $1 per gram as they continue to improve efficiency.

Gross revenue for adult-use cannabis was $44.7 million in the third quarter, which indicates an increase of 54% from the prior quarter. This marks the company’s 5th consecutive quarter of growth. Net cannabis revenues came in at $55.6 million in the third quarter which indicates an increase of 65% from the last quarter. Revenues jumped substantially to $144.4 million in the third quarter, an increase of 96% last year’s quarter. This revenue number also indicates a 20% jump from last quarter which says a lot as the company faced increasing uncertainty around consumer demand due to the COVID-19 crisis.

APHA ended the third quarter with a strong balance sheet and liquidity which included $515.1 million in cash.

APHA’s CEO Irwin D. Simon said, “We are proud of our sustained growth in Canada and continued expansion of our international capabilities. During this unprecedented time, the well-being of our employees, patients, consumers, partners and the communities we operate in is our primary focus. Our facilities, offices and patient care teams remain open and operational to continue to provide our patients and consumers with what we believe is best-in-class care and service with appropriate measures in place to protect the health and safety of employees.”

Simon also said…

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